JP Morgan warns of downside risks in digital currency markets

JP Morgan warns of downside risks On digital currency marketsHighlighting that investment capital flows in the field of digital currencies are still relatively small. Global bank analysts also expressed lingering doubts about the U.S. Securities and Exchange Commission's (SEC) approval of Bitcoin spot exchange-traded funds (ETFs) in May.

Downside Risks in Digital Currency Markets

Global investment banking giant JP Morgan released a report last Thursday. In it, he expressed his concerns about digital currency markets.

He emphasized Analysts from the bank, including Nicholas Panagiotzoulou, managing director and chief strategist for global financial market analysis at JP Morgan. He noted that “various indicators of investment capital flows in the field of digital currencies appear relatively weak” in the current year compared to previous years.

Panagiotzoulou explained: “We previously argued that the recovery of venture capital flows in... The field of digital currencies A necessary condition for the continued recovery of digital currency markets. Thus, the weakness of venture capital inflows so far presents downside risks in our view.

Analysts have indicated that hedge funds specializing in digital currencies have become a more dynamic force this year. Although the recovery in venture capital funding has been slow.

They added that its assets under management have seen a significant increase over the past six months, reaching around $20 billion.

Bitcoin Price Is Still Overvalued and Chances of Ethereum ETF Approval Are Slim

Last March, JP Morgan analysts said that... Bitcoin This still seems exaggerated despite the recent correction. Panagiotzoulou also said that “it is unrealistic to expect Bitcoin to match gold in terms of face values ​​in investors’ portfolios.”

Additionally, JP Morgan analysts continue to moderate their enthusiasm for the approval of Ethereum spot exchange-traded funds (ETFs) in May. Their latest report reiterates their skeptical view. This puts the chances of approval at 50% or less. They described this by saying:

“Following the U.S. Securities and Exchange Commission's (SEC) investigation into the Ethereum Foundation, optimism that the Ethereum Spot ETF will be approved by May 23 also appears s fade in market prices, as evidenced by the discount on net asset value (NAV). of the Grayscale Ethereum Fund Trust, which increased from 8% to 22% over the past month.

There are also reports that the United States Securities and Exchange Commission (SEC) may attempt a classification Ethereum As security. The Chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, has so far refrained from determining the classification of Ethereum. Recently, 48 members of the US Congress sent him a letter urging the chairman of the Securities and Exchange Commission to clarify whether Ethereum is a security or a commodity.

Optimistic outlook for the digital currency market

However, JP Morgan analysts remain optimistic in the long term. We are confident that the SEC will eventually approve exchange-traded funds (ETFs) for the Ethereum spot currency. They cited efforts by Grayscale Investments to convert its GBTC Bitcoin investment fund into a spot exchange-traded fund (ETF).